Foreign loans

The growing needs of the public sector, together with the decrease in exports and invisible resources, created problems in the country's balance of payments. Foreign borrowing in various forms (refugee loans, financing the expansion of public works etc.) expanded after the currency stabilization of 1928 and the purge of the credit system. The expansion of the state sector and the mobilization of local productive structures during the inter-war period were largely due to the influx of capital from abroad. The total penetration of foreign capital far outstripped the equivalent in Trikoupis' time towards the end of the 19th century. The total of foreign loans contracted reached 1,022 million gold francs, a huge amount, exceeding by far the annual gross national revenue of the country. However, it must be pointed out that the increase of this financial obligation aggravated the structural weaknesses of the Greek economy, a fact which, in the context of the economic crisis of 1929, led to the suspension of such repayments. After 1932 and the adoption of the policy of self-sufficiency, the endeavour to attract foreign capital as a means of supporting industrialization did not bear fruit.